All You Need To Know About Co-Ownership Of Property & Your Rights
Nakul and Anjali were a happily married couple till they decided to file a divorce. As Nakul insisted on dividing all the things, including their house, which was owned jointly by them, he hired a lawyer to handle his claim. The lawyer, after explaining all the financial nitty-gritty to her, managed to convince 'ignorant' Anjali that she had no stake in the house.
So, what is the co-ownership of a property?
Co-ownership, or joint ownership, is when two or more persons hold title to the same property.
Types of co-ownerships
- Tenants-in-common: When two or more people hold the title of a property but their share is not specifically mentioned, it is known as 'tenancy-in-common'. All the owners can use the entire property and every co-owner has an equal share in the property. With the death of one of the joint owners, the interest in the property does not pass to the other co-owners. The property goes to the person named in the will of the deceased. He then becomes a tenant-in-common with the surviving co-owners.
- Joint tenancy: It is a form of co-ownership where the property is owned by two or more persons in equal shares. This type of tenancy provides rights to ownership of the property for the co-owners who outlive other co-owners. Unlike tenants-in-common where one joint tenant dies, his interest automatically passes on to the other surviving joint tenant(s). There are four legal requirements that help create a joint tenancy:
Unity of time, Unity of possession, and Unity of title, which means that the co-owners have to take the same title at the same time, same deed and with equal interests.
Four, tenancy by entirety, which is a special form of joint tenancy where the joint tenants are man and the wife — with each jointly owning the property in 50:50 ratio. Neither spouse can sell the property without the consent of the other party. Apart from the four aspects mentioned in joint tenancy, another aspect is equally critical.
It's the marriage, which can be ended only through divorce or death. However, such a termination will result in the ownership being converted into tenancy-in-common.In such a scenario, it is important to brush up the laws involving the transfer of property so as to be clear about one's rights.
In such a scenario, it is important to brush up the laws involving the transfer of property so as to be clear about one's rights.
Transfer of Property Act
Section 44 of the Transfer of Property Act 1882 talks about the transfer by a co-owner and it also deals with the rights of a transferee. According to the Act, every joint or co-owner has a proprietary right of the entire property. In a nutshell, any sale has to be done with the consent of all co-owners concerned.
On the contrary, if there are specific conditions in the agreement that give co-owners exclusive rights to certain parts/portions of the property, a joint owner can sell his portion to whom he chooses.
What are the rights of a co-owner?
A co-owner is entitled to three essentials of ownership. This includes the right to possession, the right to use and the right to dispose of his share of the property if it is clearly stated in the deed.
Therefore, if a co-owner is deprived of her property, she has a right to be put back in possession. For instance, in Anjali's case, she can rightfully claim her share in the property.
Is co-ownership better?
Yes, if you are a married couple. Co-owning a house with your spouse has many tax benefits, too. In case of a joint ownership, the husband as well as the wife individually will be able to claim deductions for up to Rs 1.5 lakh for interest and up to Rs 1 lakh on principal under the Income Tax Act. It also enables easy transfer of property to your children.